Lego Swot Analysis

Undertake a competitor analysis for LEGO’s strongest competitor Mattel Mattel Inc. is the world’s largest toy company based on revenue. The products it produces include Barbie dolls, Hot Wheels and Matchbox cars, Masters of the Universe, Scrabble, Uno, American Girl dolls, board games, and, in the early 1980s, video game consoles. The company’s name is derived from Harold “Matt” Matson and Elliot Handler, who founded the company in 1945. Handler’s wife, Ruth Handler, later became president, and is credited with establishing the Barbie product line for the company in 1959. Mattel closed its last American factory, originally part of the Fisher-Price division, in 2002. By 2007, Mattel’s toys were primarily manufactured by subcontractors in Asia. Mattel has a handful of very recognizable brands. The largest, of course, is Barbie, which put Mattel on the map at the beginning, and currently accounts for over half of the firm’s revenue. Other products include Hot Wheels and American Girls. Further, Mattel has some licensing deals with a number of other established brands, including Disney, Fisher Price, Nascar, and even Microsoft.

In addition to diversifying Mattel’s product line, working with these successful and popular names will increase chances for success. On time delivery of products to retailers has soared in recent years from 50% to 90%, thanks to improvements in information systems and warehouse facilities. High service numbers have led to happier distributors. International sales account for over one-third of Mattel’s revenue, with plans to raise that figure to 50%. There are two main reasons for the company’s international success. First, product availability has been improved in specific market thanks to collaborative efforts with international firms, specifically Bandai Co. of Japan. Secondly, Mattel has been able to cater products to each market’s taste, and maintain high flexibility and low costs by simplifying packaging strategies. Finally, Mattel has a strong financial position compared to other competition with a wide global reach. Mattel also has an efficient top management with nearly 30,000 employees.

Mattel has a diverse line of products in its portfolio. Mattel could be involved in a lot of controversies like toxic toys, which hurt the brand image
 Moreover, fake products easily available in the market leading to loss of revenue Most of Mattel’s attempts to expand beyond their primary market of children’s toys were largely unsuccessful. The most concerning piece of news for Mattel, however, must be the slipping popularity of their core product, Barbie. As of 2002, Barbie dropped out of the top five selling dolls. Mattel has been scrambling to recapture market share by expanding the Barbie line to items such as computer software and girl’s clothing. The American toy market is becoming increasingly saturated and competitive, along with a downward shift in age of when children leave tangible toys such Hot Wheels and Barbie for more interactive and technological products. This makes for little opportunity for Mattel. Barbie has become an extremely recognizable brand worldwide, and has been selling very well in the markets it has been introduced to, namely Europe and Latin America.

An alliance with an Asian company, Bandai, should also prove very beneficial as numerous eastern countries open their markets to western goods. This market has been left largely untapped, and offers a huge increase in customer base. Another positive signal for international sales is the weakening dollar. This makes Mattel’s products more affordable in many of these new markets. Furthermore, the company does not experience the downside to a weak dollar in the form of overseas imports and production, as new corporate strategy has reemphasized in-house manufacturing. The most notable threat in the domestic market is that children are adopting more interactive and electronic toys earlier in age today, eroding Mattel’s primary market of children under the age of 10.

This has already forced Mattel to enter, and may force Mattel to further their involvement in the technological realm, a product category in which the firm has performed very poorly. Mattel’s attempts to follow their market into the technological realm have included the development of a number of children-friendly websites to accompany their toys. Targeting children with internet sites, however, brings about extra concerns. Mattel must be very careful to protect their legal and moral reputations by respecting the privacy of the children and their families. In addition, Mattel’s stock specifically has lacked stability for years, dropping and rising upwards of $30 per share in a matter of years. Such instability can lead to wary investors, and the firm could find itself having trouble generating funds.

Bibliography

Support: case study LEGO
Internet sources: – Wikipedia, http://en.wikipedia.org/wiki/MattelMattel, http://investor.shareholder.com/mattel/annuals.cfmSwot Mattel, http://www.wikiswot.com/SWOT/4_/Mattel_INC.htmlNew York Times (http://topics.nytimes.com/top/news/business/companies/mattel_inc/)